Economist, Telegraph Columnist, Broadcaster

Corbyn Walks Tall When He Can Point To Tory Failure

“The British people don’t have to take what they’re given”. Jeremy Corbyn liked this phrase so much he used half a dozen variants of it in his first Labour leader’s conference speech.

This message – the system is out to get you, but a Corbyn-led government will fight-back – roused a conference hall of trade unionists and party activists in Brighton last week. Across the country as a whole, though, I suspect it fell flat.

For the UK today is by no means a place where people “take what they’re given”. The British, on the contrary, tend to go to work each morning, earn their money, often start businesses and strive to improve the lot of themselves and their families.

Enterprise and self-reliance are central to this country’s identity, hard-wired into us. Such qualities characterize not only many Brits whose families have been here for centuries, but also waves of immigrants – whether Huguenots or Irish, Asians or Jews – who’ve helped shape modern Britain.

Aspirational sentiments are particularly strong among “swing-voters” – the middle two-fifths of the electorate who determine, roughly twice a decade, who lives in Number Ten. These are the people Corbyn must attract if he is to progress from campaigner to national leader, people who look to themselves and their families for assistance, to their neighbours and friends. They certainly don’t look to the state – and actually want the UK to live within its means and for government to be scaled back.

Having spent a lifetime working in the public sector, such views are anathema to the veteran Islington North MP. To him, running an economy is about manning the rhetorical and legislative barricades, taking sides in a dogfight between capital and labour. More government means a better outcome. End of story. Yet Corbyn’s policies, such as they are, belie his conference missive. His calls for evermore state-involvement and even outright nationalization, would condemn consumers to grey, monolithic “take it or leave it” public services, stripped of all choice.

Following Corbyn’s speech, excitable political correspondents, the thunderous applause of the conference delegates in their ears, told us repeatedly of “Corbyn’s astonishing mandate”. Really? He’s won the support of a quarter of a million Labour voters – or just half a percent of the British electorate. Yes, party membership is now rising, but from a very low base. But at 360,000, it’s still well short of Tony Blair’s mid-1990s opposition hey-day. And, for every new member that joins the Labour party because Corbyn “won’t press the nuclear button under any circumstances” or stubbornly refuses to mention our still yawning budget deficit during his conference speech, how many members of the broader electorate, the silent majority in the middle, does he lose?

Having said all that, as they gather this weekend for their own party conference in Manchester, the Conservatives should be careful not to under-estimate the impact of Jeremy Corbyn’s leadership – not least the economic damage it could do. Despite lacking the support of numerous Labour MPs, and the schisms already appearing among those who have agreed to serve in his Shadow Cabinet, Corbyn isn’t likely to stand-down or be pushed-out anytime soon.

With the relatively moderate Hilary Benn having just been ousted, there’s now a pro-Corbyn majority on Labour’s ruling National Executive Committee. Corbynites are wresting control of the party machine from the more sensible centre-left. That means Labour’s already pyrotechnical internal politics, already eye-catching, are set to become even more lurid.

Faced with a feeble, split-riven opposition, there is a danger the Conservatives become complacent – which would lead to bad economic policy-making. Despite a fiscally-illiterate shadow Treasury team, it is vital the Tories don’t squander what resolve they do have to get our public finances under control.

With only a slim Conservative majority, erstwhile Tory rebels may have fewer qualms about imposing defeats on the government, feeling certain their party will prevail at the polls as long as Corbyn is leading Labour. They should think carefully. With a divided far-left opposition, and a government that keeps losing Parliamentary votes, the UK could well fall out of favour with international investors. That would result not only in less job-creating foreign direct investment, but also fewer buyers for the reams of gilts this country regularly sells to finance our still massive borrowing habit.

A growing sense that sterling might be overvalued, coupled with a massive trade deficit, makes the UK vulnerable to a sudden reversal of investor sentiment – something that Conservative MPs, ministers and backbenchers alike, shouldn’t overlook.

And while they’re criticizing Corbyn in Manchester this week, and laughing through their teeth, senior Conservatives should also consider the parts of his speech that were actually worth hearing – and which, I suspect, did resonate beyond the party faithful in Brighton.

“Housing policy … perhaps nowhere has Tory failure been so complete and so damaging to our people,” said Corbyn. And he’s right. I was at a recent meeting of the Money, Macro & Finance Research Group, a gathering of this country’s leading economists. No fewer than 75pc agreed that the UK is “now in the midst of a housing crisis”. Under the Conservatives, housing completions have averaged less than 125,000 annually, far short of the 250,000 needed to cope with our own demography, let alone immigration. Home-ownership, while still high by international standards, has fallen from over 70pc of households in 2001 to 63pc today.

Among 25-34 years olds, alarmingly, that share has plunged from 68pc to 39pc. Only 7pc of 16-25 year olds’ own a property, down from 37pc little more than a decade ago. There is now an entire generation, most of whom look set to miss out altogether on the financial and personal security that home-ownership represents. Our housing market, once a generator of social mobility and contentment is now a cause of social immobility and rancour. That badly undermines free markets, encouraging the likes of Corbyn to push whacky ideas such as rent controls and sky-high property taxes.

The Tories must properly reform the planning system, clamping-down hard on land-banking by cynical developers and doing everything possible to make sure the private sector builds a lot more homes in places where people want to live. It may even be necessary – whisper it – to use parts of the seemingly untouchable “green belt”.

Corbyn is also right when he bitterly criticizes the private finance initiative – an ill-conceived leaseback scheme, invented by the Tories, and expanded by Blairite Labour, under which local authorities pay extortionate rents on schools, hospitals and other public buildings built by the private sector. More than a dozen NHS trusts are now spending over 5pc of their entire annual budget on PFI financing, while some of spending over 10pc. The scheme is a value-for-money fiasco – and, once again, gives the private sector a bad name.

Corbyn is also correct, I’m afraid, when he says “shocks in world markets this summer have shown what a dangerous and fragile state the world economy is in” and “the Tories have left us ill-prepared to face another crisis”. That’s why the government simply must get borrowing under control and should the leadership required to impose root-and-branch reform on our still too-big-to-fail banks. There’s no chance of Jeremy Corbyn becoming Prime Minister, of course. Unless, that is, there’s another banking sector implosion with the costs, once again, pushed onto taxpayers, while those responsible end up blameless and rich. In that case, even mainstream voters could become radicalized, and all bets would be off.